2 growth and income bargains that could help you retire with a million

Royston Wild discusses two shares that could make you mightily rich.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

VP (LSE: VP) extended its recent upward charge on Tuesday thanks to the release of terrific first-half trading numbers. The small-cap was last up 4% on the day, meaning that its market value has swelled 17% during the past fortnight alone.

VP, which provides a variety of rental equipment in the UK and abroad, advised that revenues charged 12% higher between April and September, to £136m. This saw profit before tax and amortisation improve 13% year-on-year, to £21.2m.

While the Brexit question continues to hang heavily on the construction sector, the Harrogate-based company has managed to keep on delivering brilliant sales growth.  Indeed, chairman Jeremy Pilkington commented today: “The UK market remains strong, and whilst there is some uncertainty around the implications that Brexit will have on the UK, the day-to-day demand continues to be highly positive.”

Meanwhile, rising business at VP’s overseas operations are helping to soothe the fears surrounding Britain’s EU withdrawal, Pilkington adding: “There is also an improving trend for our international division in the second half of the year.”

Dividends jump again

The bright first-half result prompted VP to hike the interim dividend 13% to 6.8p per share, and this bodes well for broker projections of electric dividend growth this year and next. The full-year payment of 22p per share in the year to March 2017 is expected to rise to 24.7p this year and 27.8p in the next period, meaning it sports decent yields of 2.7% and 3.1% for these years.

VP has a proud record of delivering hot earnings growth and City analysts do not expect this trend to cease just yet. A 12% advance is expected this year, and profits growth is predicted to speed up in fiscal 2019 — a 16% rise is predicted.

And these forecasts make the company brilliant value. Not only does a forward P/E ratio of 11.6  times clock in well below the widely-accepted value watermark of 15 times, but a corresponding PEG readout of 1 confirm’s VPs’ position as bona-fide bargain.

Build a fortune

The bright long-term outlook for Britain’s homebuilders convinces me that Crest Nicholson (LSE: CRST) is another undervalued stock that could make you rich.

Investors will be keenly looking for clues for a boost to UK housebuilding in Wednesday’s budget, particularly after communities secretary Sajid David fired the gun last month by proclaiming that Britain needs to build around 300,000 new houses every year to meet surging demand.

Regardless of what Chancellor Hammond decides to pull out of his red box tomorrow, I am convinced that the many regulatory, financial and practical obstacles hampering any ambitious building drive mean that the likes of Crest Nicholson should continue to reap the benefits of high property values and thus deliver brilliant profits growth for many years yet.

City analysts are expecting an earnings rise of 11% in the year to October 2018 alone, a figure that leaves the business dealing on a bargain-basement forward P/E ratio of 7.8 times.

What’s more, Crest Nicholson is a particularly-enticing pick for those on the lookout for barnstorming dividend yields. A projected reward of 33.3p per share for fiscal 2017 is anticipated to jump to 37.2p in the current year, resulting in a mountainous yield of 7.2%.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Concept of two young professional men looking at a screen in a technological data centre
Investing Articles

Investing £5,000 in a Nasdaq 100 index fund 5 years ago would be worth this much now

Zaven Boyrazian looks at the Nasdaq 100 index’s performance since December 2019. Has investing in an index fund been good?

Read more »

Electric cars charging at a charging station
Investing Articles

Why the Tesla share price rocketed 38% in November

Our writer considers the reasons for the recent red-hot Tesla share price performance. Is now a good time for him…

Read more »

Frustrated young white male looking disconsolate while sat on his sofa holding a beer
US Stock

Why NIO stock fell 13% in November

Jon Smith flags up a couple of key factors that he believes contributed to the fall in NIO stock over…

Read more »

Investing Articles

Which of these UK stocks is the better bargain in December?

Stephen Wright thinks Diageo and Senior are very different UK stocks with very similar prospects. But which one offers better…

Read more »

Frustrated young white male looking disconsolate while sat on his sofa holding a beer
Investing Articles

Mistakes to avoid when investing in the FTSE 100!

The FTSE 100 offers great near-term valuations and dividend yields, but Dr James Fox believes investors should be wary when…

Read more »

Investing Articles

Here’s why the Scottish Mortgage share price jumped 9.2% in November

The Scottish Mortgage share price has been outperforming indexes over recent weeks. Ben McPoland digs into some reasons why.

Read more »

Investing For Beginners

Why the IAG share price rocketed 24% in November

Jon Smith explains why the IAG share price did so well last month, citing three factors at work that helped…

Read more »

pensive bearded business man sitting on chair looking out of the window
Investing Articles

I think Tesla stock’s overpriced. So why not short it?

Our author thinks Tesla stock has got ahead of itself since the US election. So why not put his money…

Read more »